Q: My friends have raved for years about my tangy barbecue/marinade sauce, and I have a colleague with several other great dipping sauces. We'd like to create a product line of five to 10 sauces and salad dressings and sell them to upscale grocers like Whole Foods. What is the best way to get preorders from retailers and to select a turnkey manufacturer?

BBQ lover by the bay

A:Let's start with what is not going to happen, which is that you are not going to get any preorders from retailers. Retailers are going to want to see - and taste - a finished, packaged product before committing precious shelf space to your sauces.

There are a lot of steps you'll need to undertake before you can even start talking with retailers. Here's a very abbreviated road map:

-- Hold focus groups to find out what strangers - not just friends - think of your sauces. Susan Knapp, who sells a variety of pear-based products through her Napa business, A Perfect Pear, started by taking her homemade jellies into the cafeteria of the company where she worked.

She also set out questionnaires that people could complete when she wasn't around, so they wouldn't worry about hurting her feelings.

"If everybody said a product was terrible, I wouldn't spend time on it," Knapp said. "I'd go back to the kitchen and try again."

-- Study the market. Go to gourmet stores or food trade shows and check out every other brand of sauce. Believe me, there are a lot.

There is even a trade show called the Fiery Foods Show that is devoted to nothing but hot sauces. You'll need to be able to make a convincing case to retailers and consumers about how your sauces are different from all the others.

-- Once you've established that your recipes are winners, contract with a food scientist to ensure that your products meet food safety standards when it comes to things like PH level. (The food scientist can also provide you with nutritional data for your labels.)

"If it's not PH balanced, you may have to pay a state food inspector to be on site for production and inspect every batch before it's released," Knapp said.

-- Choose a manufacturing facility. This could be either a commercial kitchen where you rent time and produce the sauces yourself or a company that manufactures similar products and will make yours for a fee.

"You'll want to find someone who will do small batches of 100 or 200 cases, but a lot of co-packers won't take someone who does less than 500 cases," Knapp said.

-- Work on branding, design and labeling. Very small food producers aren't required by law to place nutritional data on their labels, but many stores and consumers expect it these days. Ditto for bar codes - it's not required, but supermarkets will insist upon them.

-- Don't forget insurance. Most supermarkets will require you to have at least $2 million of liability insurance in their name as well as yours.

Once you've got your finished products, try selling them at farmers' markets - a good way to gauge consumer reaction firsthand. Or directly approach small gourmet stores in your area.

"One of the most important things to ensure sell-through (consumer sales) is product demos," said Anni Minuzzo, who founded Biscotti Nucci and is now a specialty food consultant. "You'll need to come in on a Saturday and give samples so people can taste it."

You may also have luck selling to small upscale supermarket chains like Andronico's and Lunardi's, which are willing to take risks on trendy new products that their larger competitors don't carry.

And some individual Whole Foods stores may be willing to carry your sauce at this early stage, before the chain as a whole would consider it.

Placing your product in these kinds of local stores will help you land a distributor, which in turn is your path into the larger chains.

"You need to get the product out there first so you can develop demand and get distribution, before you can get orders from a chain like Whole Foods," said Carol Harvey, owner of Palate Works, which provides nutrition analysis and marketing help to food businesses.

San Francisco has an unusual nonprofit commercial kitchen called La Cocina that offers free access and technical help to low-income entrepreneurs who are starting food businesses. If you don't meet the income criteria, it's also possible to rent time at La Cocina for a fee. See www.lacocinasf.org .

Finally, don't forget what every new entrepreneur should have - a business plan. Figure out your costs and your pricing in advance. Margins are tight in the specialty food business. Your barbecue sauce may be hot, but without good planning, you could be the one who ends up feeling the burn.

Q: The nonprofit agency that I work for receives funding in unpredictable spurts. Sometimes we have lean times with tight cash flow, and other times there is a fair amount of cash in the bank. How much cash should a nonprofit keep in reserves, and under what circumstances should it tap those reserves?

Unsure in Oakland

A:There's a short answer and a shorter-answer-that-is-really-a-longer-answer.

The short answer is that you should aim for cash reserves equal to three to six months of your operating budget.

The shorter-but-longer answer is: It depends.

"We often say reserves should amount to three to six months of regular expenses for a small or midsized nonprofit," said Jeanne Bell, executive director of CompassPoint Nonprofit Services, a San Francisco group that provides training to nonprofits. "The reality is that a majority of small nonprofits don't have that, so it's not a perfect metric."

Cash reserves - for both nonprofits and for-profit enterprises - are designed to protect you against sudden dips in revenue or unforeseen expenses.

They're a kind of hedge against risk. But different organizations have different levels of risk. So that's where the "it depends" factor comes in.

For instance, say your group receives the bulk of its funding from the government as reimbursement for services. That's probably a more dependable revenue stream than if you relied entirely on individual donations.

Or say you own your building. That ratchets up your risk.

"If you have a building, you need a bigger reserve because of the unpredictability of capital needs for things like new roofs," Bell said.

Want to learn more about computing the appropriate level of reserves for a nonprofit? CompassPoint has a good article in its online library at links.sfgate.com/ZNE .

Note: Reserves are important to for-profit businesses as well as nonprofits. Just ask Vicki Suiter, a small-business consultant with Suiter Financial Systems in Novato.

"One of my clients is a construction subcontractor who had one job end and another that was supposed to start right away but was delayed for three months," Suiter said. "His cash reserves allowed him to keep his staff and pay overhead during that time."

If building up six months' worth of reserves seems daunting, start small. "Starting somewhere is better than being nowhere at all, even if it's just enough to cover one month of payroll," Suiter said.